The recent increase in repossessions together with the slowing down of the UK housing market has provided buyers with a great opportunity to pick up a real property bargain by buying at auction. Here's how to go about bidding successfully for your dream home.
Buying properties at auction
For those wishing to sell their property in a hurry, the most effective way to do so is through a property auction. The good news for potential buyers is that prices tend to be lower at auction than they are for properties for sale on the open market, and there is no chain which could potentially hold up completion of the purchase.
The process of buying a property at auction is much quicker than it would be if you made a purchase through a traditional estate agency. As soon as the hammer falls, the lot is effectively yours, and you then have 28 days to complete the purchase.
There are a number of specialist property magazines that advertise auctions, and your local estate agent will also be able to help. Once you've found an auction, ask for a catalogue and take the time to study it carefully. The catalogue will contain information on what property is for sale, how to go about arranging to view the various lots, and it will also give details of the general conditions of sale.
When you've found a suitable property that you like, always go and have a look round it before the auction. This is not compulsory, but it is sensible. The place could be in a very poor state of structural repair, and you may not want to take on the potential hassle of repairs and building works.
It's also a good idea to consult a property valuer or surveyor to ask their opinion of the property's value if it was for sale on the open market. This will help you to set a benchmark on how far you're prepared to go once the bidding starts against the guide price the property is expected to sell for.
You will need to instruct a solicitor prior to the auction so that they can obtain any required legal information for you. The auction house may also provide legal packs which you should pass to the solicitor, along with the property listing shown in the catalogue. Make sure that there are no special conditions attached to the property you are going to bid on. For example, you might be expected to pay the legal fees of the seller, as well as your own.
Unless you are a cash buyer, you'll need to make sure you have the necessary finances in place before the auction. Once the hammer falls, you'll be asked to hand over a deposit of 10% of the sale price, with the balance due within 28 days. Always get your mortgage agreed prior to the auction or you could risk losing your deposit.
At the auction
Before you set of to the auction house, it's worth a phone call to check that the property hasn't been withdrawn and is still for sale. Don't forget to take your deposit (cash or cheque), and two forms of identification; a valid passport and utility bill are usually acceptable, but check with the auction house before you go.
On arrival at the auction rooms you'll need to register with your full name, current address and contact information. You will then be issued with a bidding card and allowed into the auction room. When you register, ask for an 'addendum sheet'. This will contain additional information about the properties that are going under the hammer on that day. Make sure there are no changes to the property that you are going to bid on.
When the bidding starts, keep calm and stick to your budget. All lots will have a guide price which is published in the catalogue, and a reserve which is not made public. The reserve price is the lowest amount that the seller will accept. If the reserve is not met, the property will not be sold.
If you can't get to the auction in person, you can still bid by phone or by proxy representative. Ask the auction house for information on the procedure for this.
Buying property at an auction might be something you could consider if you are not in a chain, and want a quick purchase. Do your research, put the finances in place, set yourself a budget and stick to it! If you can take you time however, don't hesitate to contact a local estate agent such as Beercock Wiles & Wick.
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